THE Philippine peso sank to another historic low against the United States dollar during trading on Wednesday, driven largely by sustained demand for the greenback as importers and market participants continued to secure foreign currency to meet their operational needs.
After opening the session at ₱61.20:$1, the local currency weakened steadily throughout the day, hitting an intraday low of ₱61.62:$1. This marks a drop of 32 centavos from the previous record close of ₱61.30:$1 recorded just a day earlier, reflecting growing pressure on the country’s currency amid shifting market and global conditions.
According to Michael Ricafort, chief economist at Rizal Commercial Banking Corp., the downward trend comes as market players move to protect their finances following the peso’s break past the ₱61:$1 threshold.
He explained that the continued depreciation stems from “continuous hedging activities by importers, investors, and others with requirements for US dollars after breaching above ₱61-to-one dollar yesterday, as a matter of prudence.” This practice, common when currencies show signs of instability, involves acquiring foreign currency in advance to avoid higher costs in the future, which in turn creates greater demand and pushes the exchange rate even higher.
Global developments have also played a key role in the currency’s performance. Ricafort pointed out that negotiations between the United States and Iran have remained stalled for over two weeks, adding uncertainty to the international economic landscape.
Locally, the pressure is intensified by government measures aimed at securing the country’s energy supply. “The breach above ₱61:$1-mark was largely triggered by some hedging activities on the country’s oil imports and the importation of other products; in view of the State of National Energy Emergency declared since March 24 to further increase the country’s fuel inventories as a matter of prudence amid the continued closure of the Strait of Hormuz since the conflict began on February 28,” he added, noting that these large-scale purchases have significantly increased the need for US dollars in recent weeks.
